Could you help me to solve these requirements form 1-3. Please give me the corre

Question

Could you help me to solve these requirements form 1-3. Please give me the correct answer. Thank you.

Plane Entertainment 8 a pro der of Cable ternet, and on-demand vice se oes Planet cu enty 9ends mon y blls to its customers via the postal service. Bacause of a concarn for the environmant and recent increases in postal ratas, Planer management is considenng oering an o ton o its cus amers or paper ess tiling n addtion a sa ing nmng naper and pastal aas s er ss billing wil saveanergy and water(hrough reduced paper needs, reduced wasle disposal, and reduced transportalion needs.) Alhough Planel would ike lo swilch lo 100% pe erle88 biling many of its customers are rot confortable with paperless biling or mey not have online acceea ao the paper biling option wll remain regardess of whather Planet adopts a paparless billing system or not. the costs of the system are the saa eso tha clerks and the cost of leasing the computer system. The paparlass blling systam being proposed wauld be able to hancle up to 1,010,a00 The cost o?e peae ess biling system woud be $215,640 per quarter with no variable oosts a bills per quarter more than D10 000 bills per quar erwould urea d er n: c mpuier syn m and Is outs the scope o he curren silualion at Planel) The cormpany has gathered ils coet dala for lhe past year by quarter for paper, toner carlridges, printer mairnleriance costs, end postage costs 1or its billing department. The cost dea are as 101 o s: EEB Cick he icon to view the data.) Read the requirements. Requirement 1. Caloulate the variable cost per bil mailed under the current paper-besed biling syslen. The variable cost per bill maled under the current paper-besed biling systern is $ Requirements 1. Calculate the variable cost per bill maliled under the current paper-based Data Table billing systam. Assume that te company pr)ects that it will have a toal of?60,000 Dlls 70 mail in the upcomirg quarter If anough customers choose tha paperless billing option so that 40% af the mailings can be converted to paperless, how much would the company gave f consider the cost of the paperess billing system? what it only 30% of the maiings are converted to the paperlees option (assume a total of 760,c0 bills? Shouid the company still offer the papeness hiling system? Explain your rationala. 2. Quarter 1 Quarter 2 Quarter 3 Quarter 4 om t he peperless billing sysem be sure to Total paper, ioner, printer maintenance, $ 723,200 730,000? 820,000 $ 740.000 3. and postnge costs Total number of bils mailad 650,000 656,C00 760,000 PrintDone PrintDone

Explanation / Answer

Ans

The Sustainability and cost behavior

1)

The Variable cost per bill mailed

Highest Cost quarter = Quarter 3

Lowest cost quarter = Quarter 1

Variable cost per bill mailed = ($820000 - $723200)/(760000 - 650000)

Variable cost per bill mailed = ($96800)/(110000) = $0.88

2)

Calculation of savings

Next quarter bill estimation = 760000

Conversion to paperless system = 760000*40% = 304000

Savings if paperless system adopted = (304000*$0.88) = $267520

Total cost of Paperless system = $215640

Net Savings = ($267520 - $215640) = $51880

3)

Savings calculation

Conversion = 30% = 228000 to paperless

Cost saving = (228000*$0.88) = $200640

Cost of paperless system = $215640

Loss = ($215640 - $200640) = ($15000)

The Company should still adopt paperless billing system since in future it will generate savings since more people will convert to paperless mode because of ease of technology.

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